Can Microsoft’s new triumvirate reboot the behemoth, or will it be more of the same?

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Field of Dreams: But no Jobs or Musk

None of Microsoft’s three leaders have the laser-like focus on creating industry-changing products that Steve Jobs had or Elon Musk has. In fact, they have all been part of the current Microsoft team and strategy for an extended period of time. That makes it likely that Microsoft will continue to try to be a fast follower, relying on its shear breadth — cited by Nadella in his very first email to employees — as the deciding factor in why it believes its ecosystem and products will dominate.

Unfortunately, while that strategy worked on the desktop using the leverage provided by Windows and Office, it hasn’t proven successful in the broader environments of mobile and the cloud. Microsoft sacrificed its early innovation and leadership in mobile to Apple, then has had to try to play catch up ever since. Nadella’s own cloud unit, while economically successful and popular with many existing Microsoft customers, took a very conservative approach modeled after Amazon’s AWS offering. By not innovating further, it not only didn’t expand Microsoft’s customer base, but allowed plenty of room for fast-moving vendors like Salesforce.com to innovate well beyond Microsoft’s model.

A lack of category-defining or leadership products leaves Microsoft with something of a “Field of Dreams” strategy. It is working desperately hard to create an end-to-end set of software, services, and devices that deliver on Windows everywhere — but is in danger of not having the single best offering anywhere. This is definitely not the “Embrace the Customer” strategy we were hoping for when Ballmer stepped down. We’ve already seen evidence of this in Windows 8, which has alienated large swathes of its existing desktop users for the sake of providing a unified interface with so far largely-non-existent Windows tablet users.

For Microsoft’s broader-is-better strategy to be successful, Microsoft needs to clearly identify specific target audiences and deliver unique value for them. Unfortunately for Microsoft, its own breadth — and its new functional organization structure — work against it here. By trying to serve gamers, mobile users, consumers, office workers, the enterprise, and cloud vendors from one management team all at the same time, Microsoft is fighting a war on essentially every front of the computing landscape.

Microsoft’s introduction of Surface and acquisition of Nokia have extended its battleground to hardware as well as software. While Apple, Google and Amazon have each developed product portfolios in multiple markets, they have been able to innovate in those product lines largely one at a time — Apple created the Mac, the iMac, iPod, the iPhone, and the iPad sequentially; it didn’t have to come up with them all at once. The last company to assume it could dominate the computing industry based on scale alone was IBM — remember when IBM was “the safe choice?” IBM had to abandon that strategy after it had been picked apart by best-of-breed offerings from other vendors in many of its markets. Unfortunately, with this latest set of safe choices in leadership, it seems like Microsoft is not prepared to make any serious changes in the strategy that it have gotten it into trouble.

The bottom line

Gates’ time away from Microsoft has certainly given him a uniquely broad perspective about the world and the problems that can be solved by technology. If he can use that perspective, along with his unique ability to guide Microsoft’s direction, to empower Nadella and his team, Microsoft will have a chance to regain its positive momentum. That’s the most optimistic scenario, which still leaves it the challenge of designing and marketing truly great products. A more likely scenario is that we’ll see more of the same from Microsoft — an attempt to serve too many markets with too little focus on any of them. That scenario won’t make either investors or customers very happy and will likely rekindle discussions of whether the company should be broken up or the leadership should be changed yet again.

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